The Buffalo Niagara job market is getting tighter.
The region’s unemployment rate dropped below 5 percent during May for just the second time since the recession hit nine years ago, the state Labor Department reported Tuesday.
The local jobless rate fell to 4.4 percent last month, down from 5.5 percent in May 2015 as the region continued to add jobs at a modest pace, while its pool of available workers held almost steady. With hiring slowly growing among local employers at a time when the labor force is stagnant, the unemployment rate had its second-biggest drop from one May to the next in the last 26 years.
May typically has some of the lowest unemployment rates of the year, as summer jobs start to fill up, while schools are still a month away from their summer shutdown. But last month’s unemployment rate was unusually good: It was the lowest for any month since May 2007.
“These are very good rates,” said John Slenker, the Labor Department’s regional economist in Buffalo. “I don’t know if it’s as good as it gets, but we’re getting pretty close.”
May’s 4.4 percent unemployment rate is within shouting distance of the region’s modern-day low. Unemployment dipped as low as 3.8 percent in October 2000 and hovered between that and 4.3 percent for the final 10 months of 2000.
But local economists also warned against reading too much into a single month’s numbers.
“It’s consistent with the employment growth we’ve seen,” said George Palumbo, a Canisius College economist. “But I’d like to see a trend established before I declare victory in the employment market.”
The latest drop comes as the region has been slowly but steadily adding jobs since late 2010, including an increase of 3,400 jobs from May 2015 to May 2016 that some local economists believe may be understating the actual gains in employment the region is experiencing.
The unemployment numbers, which are based on a different survey than the job data, can be fairly volatile and also come with a margin of error that approaches 0.5 percentage points one way or the other.
But even with the imprecise nature of the unemployment data, Slenker said the May jobless report shows that the region’s job market is on a steady upswing.
“The economy is producing jobs steadily. There are a lot of entry-level jobs out there,” he said. “We’ve really used up a lot of our excess labor pool.”
The drop in the Buffalo Niagara jobless rate mirrored the decline in unemployment across New York, where the unemployment rate fell to 4.2 percent from 5.3 percent in May 2015. The local jobless rate was slightly lower than the national average of 4.5 percent. None of the unemployment rates are adjusted for seasonal factors.
Other upstate metro areas also had big drops in unemployment, with the jobless rate in Syracuse falling to 4.3 percent from 5.5 percent a year ago; Rochester dropping to 4.2 percent from 5.3 percent in May 2015; and Albany falling to 3.7 percent from 4.5 percent a year ago.
Pushing the Buffalo Niagara jobless rate down was a combination of fewer unemployed people and a rising number of workers who have jobs. The number people in the region who don’t have a job but were actively looking for one fell by 20 percent, or 6,100 people, from May 2015 to May 2016, the labor department said. That was the lowest for any May since 2001.
At the same time, the number of people who were employed during May rose by 1 percent, or 6,300 people, to the highest level for any May since 2009. That left the local labor force – the pool of workers that the region’s employers tap into to fill their jobs – at almost the same level it was a year ago. The 300-person increase in the local labor force was the smallest in seven months.
“We had so many people leave the labor force during the recession, they can come back in,” Palumbo said. “How many people have left the region in search of better pay elsewhere? How many people have left the labor force because they’re 66 or 67 years old? We have a very mobile labor force.”
Despite the tightening job market, Slenker said it still can be a struggle to find a job for workers who lack the right skills or don’t have access to the transportation they need to get to available employment opportunities.
“We’re rapidly using up our skilled labor,” Slenker said.
“You will always see more people enter the labor force,” he said. “While there always are discouraged workers out there, I don’t believe we’re looking at a large pool.”